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The government today hiked the threshold limit for tax departments to file appeals in tribunals and courts, which will bring down litigation substantially.

Accordingly, the tax department will file appeals in ITAT/CESTAT if the tax amount involved is Rs 20 lakh or more, up from Rs 10 lakh at present.

Appeals would be filed in high courts if the tax amount involved in litigation is Rs 50 lakh, up from Rs 20 lakh at present. For the Supreme Court, the threshold limit has been hiked to Rs 1 crore, from Rs 25 lakh at present.

This is a major step in the direction of litigation management of both direct and indirect taxes as it will effectively reduce minor litigations and help the Department to focus on high value litigations.

Finance Ministry Statement

The government has decided to increase the threshold monetary limits for filing departmental appeals at various levels in order to reduce the long pending grievances of taxpayers, minimise litigations pertaining to tax matters and to facilitate the ease of doing business.

In case of the Central Board of Direct Taxes, out of total cases filed by the department in Income Tax Appellate Tribunal, 34 percent of cases will be withdrawn.

In case of high courts, 48 percent of cases will be withdrawn and in case of the Supreme Court, 54 percent of cases will be withdrawn.

“The total percentage of reduction of litigation from department’s side will get reduced by 41 percent. However, this will not apply in such cases where substantial point of law is involved,” the statement added.

Similarly, in case of the Central Board of Indirect Taxes and Customs, out of total cases filed by the department in Customs, Excise and Service Tax Appellate Tribunal, 16 percent of cases will be withdrawn.

In case of the high courts, 22 percent of cases will be withdrawn and in case of the Supreme Court, 21 percent of cases will be withdrawn.

“The total percentage of reduction of litigation from Department’s side will get reduced by 18 percent. However, this will not apply in such cases where substantial point of law is involved,” the ministry said.

This step will also reduce future litigation flow from the revenue department side.